BACKGROUND The digital transformation of the economy and society gives rise to a need for updated regulations and rules of the game for the digitised market. Within the EU, this need has been reflected in a number of legislative initiatives, most recently the Digital Markets Act (DMA), the Digital Services Act (DSA) and the Artificial Intelligence Act. This work affects not only the European market but also international trade relations that extend beyond the EU's borders. The EU is also part of the Joint Initiative (JI) on E-Commerce which was launched at the 11th WTO Ministerial in 2017 and aims at setting the global rules for digital markets.
At its 2021 Annual Conference in Sweden, the Jean Monet Network: Trade & Investment in Services (TIISA) in collaboration with The Ratio Institute and Swedish Entrepreneurship Forum organised a Policy Roundtable of experts from academia, politics, and business to discuss the relationship between the EU's legislative initiative for the internal market and developments in international trade governance, notably the JI on E-Commerce:
● Is it the EU's comparative advantage to be a leader in regulating these areas? ● How are the EU's relations with the outside world affected?
Industry Professor Jane Drake-Brockman, Institute for International Trade, The University of Adelaide and Founding Director of the Australian Services Roundtable, writes for the Council on Economic Policies (CEP) on what the recent success multilateral services trade facilitation success means for the World Trade Organization.
The building on Lake Geneva which houses the WTO stands as the symbol of the multilateral trading system and the bastion of global non-discrimination in trade governance. Meetings held under WTO auspices, whether physical or virtual, attract global participation by all trading partners. No other institution, and no other location, provides such a venue.
Recent frantic activity inside the WTO building, sadly last week without political decision-makers at Ministerial level, has managed nevertheless to magic up some valuable concrete outcomes
The Asia-Pacific Regional Cooperation and Integration Index (ARCII) is a robust tool to track progress on different areas of regional cooperation and integration (RCI). To capture its increasingly complex nature, the enhanced ARCII framework offers several innovations including new dimensions on digital connectivity and environmental cooperation.
The seminar discussed the main results of the new framework.
Professor Jane Drake-Brockman of IIT, University of Adelaide along with leading experts discussed the implications for regional and global integration, particularly in the wake of the COVID-19 pandemic.
Economist, Regional Cooperation and Integration Division
Economic Research and Regional Cooperation Department
Asian Development Bank
Panelists
Jane Drake-Brockman
Industry Professor
Institute for International Trade
University of Adelaide
Ronald Butiong
Chief, Regional Cooperation and Integration Thematic Group
Sustainable Development and Climate Change Department
Asian Development Bank
Yann Duval
Chief of Trade Policy and Facilitation
Trade, Investment and Innovation Division
United Nations Economic and Social Commission for the Asia and the Pacific
George Riddell is Director of Trade Strategy at EY, London, primarily responsible for advising companies on their international trade strategy. He has a decade of experience in international trade. Prior to joining EY, he spent over six years with the UK delegation to the WTO.
On 17 June 2021, Australia and the United Kingdom announced an Agreement in Principle on a new Free Trade Agreement (FTA). Since then, negotiators on both sides have been hammering out the details of the legal text of the agreement.
With that final agreement expected imminently, it is an ideal moment to look at one of the topics that has garnered less attention than its agricultural counterparts – trade in services. Here I assess the prospects for services trade between the countries, as well as areas of future development.
Current situation
While the COVID-19 pandemic continues to disrupt global trade, prior to the pandemic the amount of services trade between the UK and Australia has been considerable, with the UK being Australia’s third largest two-way services trading partner, accounting for 7.7% of Australia’s total services trade in 2019-20. For the UK, services exports to Australia had been growing steadily from £6.2bn in 2016 to £7.7bn in 2019.
In 2019, the top categories of UK services trade with Australia (excluding travel) included:
1
Other Business Services
£1.8bn
Professional & Management Consulting Services
£553m
Legal, Accounting & Public Relations
£449m
2
Trade, trade-related & other business services
£1.2bn
Architectural, Engineering and Scientific Services
£274m
3
Insurance Pension Funds
£1.2bn
4
Transportation
£1.1bn
5
Financial Services
£0.7bn
For services providers in Australia exporting to the UK in 2019 (excluding travel) other business services (£880m) and technical and trade-related services (£619m) were also the largest categories of Australian exports.
The digitalisation of the world economy is continuing at a fast pace. Its successful progress is dependent on the ability to move data as freely as possible across international borders. Digital trade chapters are therefore becoming a critical part of bilateral, plurilateral and multilateral trade agreements.
Various domestic policy objectives are implemented at the national levelby trading partners, which lead to differences in approaches to regulating cross-border data flows (CBDF). It is therefore crucial to explore where a landing zone might be found that would allow adoption of global rules on electronic commerce (e-commerce) and digital trade.
Understanding the background historical context is important as a first step. One can then look at the specific issue of CBDF in various negotiating camps and examine divergences and similarities that might lead to an acceptable solution for international rules on digital trade. This article highlights the key elements of a longer paper that seeks to identify a potential landing zone for CBDF.
1. The historical context
The multilateral route:
The WTO Uruguay Round ended 25 years ago when the internet was still in its infancy. But global rules on digital trade have not been updated since. Many WTO Members considered that a new path was necessary and decided in 2017 to launch exploratory work towards future WTO negotiations on trade-related aspects of e-commerce. 86 Members are now part of the Joint Statement Initiative (JSI) on E-commerce. Progress has been made on some important issues with legal text for future rules nearly closed, hopefully with progress registered at the 12th Ministerial Conference in November 2021 in Geneva. But negotiators have not yet touched upon the decisive issue which would really impact global rules on digital trade: the issue of CBDF.
The plurilateral/bilateral path:
In the absence of rules at the multilateral level, many WTO members felt the need to enact some rules for the flow of data between them. We look at the first ever agreement with a complete chapter on digital trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP), as well as the Digital Trade chapter of the USA–Mexico–Canada Agreement (USMCA). The USA-Japan Digital Trade Agreement also establishes high-standard rules in this area. Among the CP-TPP signatories, some considered that the text on digital trade did not go far enough, and decided to adopt even deeper rules which we also looked at (DEPA, DEA, etc).
The European Union (EU) has negotiated an “Electronic Commerce” chapter in its agreement with Canada but there is no provision on CBDF. The EU-Singapore FTA includes a chapter on e-commerce as does the EU FTA with Japan, in the latter case with a 3 year review clause on CBDF. The EU-Vietnam FTA e-commerce chapter is very weak. The only FTA implemented by the EU with rules on CBDF is the EU-UK Trade and Cooperation Agreement (EU-UK TCA) which contains a fully-fledged Title on “Digital Trade”.
The EU is currently negotiating FTAs with Australia and New Zealand. The final outcomes in these digital trade chapters might demonstrate where a possible landing zone might lie for global trade rules on CBDF (including for the WTO JSI on E-Commerce).
The Asia Pacific Services Coalition (APSC) and the APEC Business Advisory Council (ABAC) have teamed up once again to organize a Public-Private Dialogue on Services, with the theme, “Driving Services for an Inclusive and Resilient Economic Recovery”
The two-day webinar will gather international experts, APEC officials and business leaders to share experience and best practices, and from there, draw lessons on how the services sector can build-back-better and build-back-broader the world economy.
The event is even more timely and important with the midterm review of the APEC Services Competitiveness Roadmap (ASCR) this year. In 2015, APEC Leaders committed to developing a strategic and long-term services agenda through a region-wide set of actions and mutually agreed targets to be achieved by 2025. The following year, APEC set concrete targets to: (1) reduce the restrictions to services trade and investment, (2) increase the share of services exports, (3) increase the growth in trade in services, and (4) increase APEC’s share in global services trade.
With COVID-19 coming into the picture, how is APEC faring towards achieving its targets? In light of the challenge of the pandemic and threat of climate change, what are the necessary policy adjustments and practical measures to facilitate trade and improve service competitiveness?
Jane Drake-Brockman is moderating in Session 4: Accelerating Digital Adaptation
Lee Tuthill, IITs newly appointed Visiting Fellow is a Keynote Speaker in Session 2: Servicing The World Towards Economic Resilience
WHEN: October 12 (08.00 to 10.30) and October 13 (20.00 to 22.30), Philippine time.
This PPD is organized by APSC and ABAC, in partnership with the Trade & Investment in Services Associates (TIISA) and the Department of Foreign Affairs and Trade (DFAT) Australia, and presented to you by ABAC Philippines and Globe Telecom.
This year’s Public Forum, entitled “Trade Beyond COVID-19: Building Resilience”, looked at the effects of the pandemic on trade and how the multilateral trading system can help build resilience to COVID-19 and future crises. Under the main theme the Public Forum’s sub-themes were Enhancing Resilience beyond COVID-19; Strengthening the Multilateral Trading System; and Collective Action towards Sustainable Trade.
TIISA Network Director; Jane Drake-Brockman participated as coordinator in the following sessions.
Dr Sherry Stephenson, Convenor, Pacific Economic Cooperation Council (PECC) Services Network. Considerable discussion has been carried out over the past 18 months on how to most effectively address the COVID-19 health pandemic in an international context, particularly the critical role of trade in providing the necessary channels for moving essential medical equipment, vaccines and therapeutics, across borders. Several proposals have been submitted to the WTO on how trade policy can best respond to the COVID-19 crisis.
However, almost none of these numerous proposals have mentioned the critical role that services play in moving essential goods across borders. There is a striking difference between the focus on trade in goods and the absence of attention on the necessary role of services in allowing these goods to reach their destination.
Most of the discussion that has taken place at the WTO over the past 18 months has focused on proposals to adopt a temporary waiver from the TRIPS Agreement that would allow for the production of generic COVID-19 health products outside of normal patent obligations. More recent proposals have called for a WTO Trade and Health Initiative and for the creation of a WTO Committee on Trade and Health. The recent proposals by several WTO members to the WTO General Council have been submitted with the purpose of crafting a Declaration as well as a Work Program or Action Plan for the WTO to pursue in addressing the pandemic. These proposals will be negotiated for finalization at the coming Ministerial Council meeting (MC12). However, only a few of these recent submissions mentions or highlights the vital role of services in facilitating the movement of trade in essential goods.
Nicholas Frank, Associate Lecturer in the School of Politics and International Relations, Australian National University.
Global e-commerce is governed by a dense web of preferential trade agreements (PTAs). While the literature on e-commerce governance is growing, our knowledge of the landscape of the e-commerce governance system remains limited.Mapping the current architecture of the system reveals important structural features and properties – such as the degree of fragmentation, polycentricism, and complexity – which can have an impact on system outcomes.
This piece introduces a new working paper that presents a novel network analysis of the architecture of the e-commerce governance regime.
Visualizing the e-commerce governance network
Visualization is one of the draw cards of network analysis as it can reveal important structural attributes of a system in an accessible manner. Figure 1 depicts the e-commerce governance network in 2020 using a force-directed algorithm.
Countries are colour coded according to their level of development (green for high income countries, purple for upper-middle income countries, orange for lower-middle countries, and blue for low-income countries). The size of each country’s node is weighted according to the number of trade agreements with e-commerce provisions to which it is party. The ties between countries (i.e. trade agreements) are colour coded based on the scope of their e-commerce or data flow provisions. Agreements with more than 1500 words relating to e-commerce or data flow regulation are coded green, those with between 1000-1500 words are coded black, those with between 500-1000 are coded red, those with less than 500 words are coded purple.
The project brings together leading academics and key institutions in domestic regulation and global governance of international services trade and investment flows to form a transnational consortia of academics across Europe, Australia and Asia.
The hybrid TIISA Annual Conference is on the theme of “Trade and the digital transformation of services”. The COVID-19 crisis has seen an acceleration of the digital transformation of services and a rise in remote delivery of services both within and across borders. There is consequently an impetus to update trade policy and regulatory frameworks to unleash the potential for the digital transformation to support sustainable growth and job creation all over the world. Against this backdrop we invite papers covering, but not limited to, the following topics:
The digital transformation of services and the WTO rule book
The digital transformation of services: lessons from free trade agreements and digital economy agreements
Digital transformation, services trade and jobs
Innovation, entrepreneurship and the development of new digital services
Regulatoryimpacton data-driven innovation in (digital) services (e.g. data and privacyprotection, GDPR)
The role of competition and competition policy in shaping global digital services markets
Sector studies of digital transformation and trade (e.g. finance, telecom, media, health, education)
Sponsored by Erasmus+, Hosted by AI-Econ Lab, Örebro University, Sweden; partner Ratio and Swedish Entrepreneurship Forum.
Call for papers (now closed)
The AI-Econ Lab at Örebro University in association with the RATIO institute and Entrepreneurship Forum invite you to the 2021 annual conference of the TIISA network. The themes this year is trade and the digital transformation of services.
Submission
4 October – Submission deadline
Submit abstracts (< 250 words) to conf-ai-econlab@oru.se
8 October – Selection, based on abstracts.
24 October – Papers due, then sent to discussants
The Ratio Institute is an independent and multidisciplinary research institute in Stockholm, Sweden, with a research focus on conditions for enterprise.
Swedish Entrepreneurship Forum is a network organization for initiating, conducting and communicating policy relevant research in the field of entrepreneurship, innovation, business dynamics and growth.
Trade in Services and Investment Associates (TIISA)
